CASE DIGEST: Chan Wan v. Tan Kim

 

CHAN WAN v. TAN KIM, GR No. L-15380, 1960-09-30

 

Facts:

This is a suit to collect eleven checks totalling P4,290.00. Such checks payable to "cash or bearer", and drawn.. by defendant Tan Kim (the other defendant is her husband) upon the Equitable Banking Corporation, were all presented for payment by Chan Wan to the drawee bank, but they "were all dishonored and returned to him unpaid due to insufficient funds and/or causes attributable to the drawer."

Tan Kim declared without contradiction that the checks had been issued to two persons named Pinong and Muy for some shoes the former had promised to make and "were intended as mere receipts"

In view of such circumstances, the court declined to order payment for two principal reasons: (a) plaintiff failed to prove he was a holder in due course, and (b) the checks being crossed checks shoud not have been presented to the drawee for "payment," but should have been deposited instead with the bank mentioned in the crossing.

Eight of the checks here in question bear across their face two parallel transverse lines between which these words are written: non-negotiable China Banking Corporation.

Issues:

plaintiff's right to collect on the eleven commercial documents.

Ruling:

These checks have, therefore, been crossed specially to the China Banking Corporation, and should have been presented for payment 4by China Banking, and not by Chan Wan. Inasmuch as Chan Wan did present them for payment himself the Manila court said there was no proper presentment, and the liability did not attach to the drawer.

It must be remembered, at this point, that the drawer in drawing the check engaged that "on due presentment, the check would be paid, and that if it be dishonored * * * he will pay the amount thereof to the holder". Wherefore, in the absence of due presentment, the drawer did not become liable.

Nevertheless we find, on the backs of the cheeks, endorsements which apparently show they had been deposited with the China" Banking Corporation and were, by the latter, presented to the drawee bank for collection.

These circumstances would seem to show deposit of the checks with China Banking Corporation and subsequent presentation by the latter through the clearing office; but as drawee had no funds, they were unpaid and returned, some of them stamped "account' closed". How they reached his hands, plaintiff did not indicate.

Yet it does not follow as a legal proposition, that simply because he was not a holder in due course, Chan Wan could not recover on the checks. The Negotiable Instruments Law does not provide that a holder who is not a holder in due course, may not in any case, recover on the instrument. If B purchases an overdue negotiable promissory note signed by A, he is not a holder in due course; but he may recover from A, if the latter has no valid excuse for refusing payment. The only disadvantage of a holder who is not a holder in due course is that the negotiable instrument is subject to'defenses as if it were non-negotiable.